Sensex, Nifty return to winning ways, end week with gains but remain range bound

Domestic benchmark indices Sensex and Nifty ended Friday’s trading session with gains. S&P BSE Sensex closed 127 points higher, recouping most of the losses recorded yesterday. The 50-stock Nifty settled above the 11,900 mark to close at 11,930 levels. In the last five days, Sensex gained 0.63% while Nifty 50 jumped 0.90%. Broader markets exhibited strength during the day and outperformed the benchmarks. The fear gauge of domestic stocks, India VIX, slipped 3.64% during the day to close below the 22 levels.

Broader markets outperform: While Sensex and Nifty gained nearly 0.30%, broader markets ended higher. BSE Midcap gained 0.59% while the Smallcap index moved 0.71% higher. On the other hand Nifty Midcap 100 gained 0.79% and Smallcap 250 jumped 0.71%.

Top gainers: Maruti Suzuki India stocks gained 4.44% to end as the top index gainer, followed by Mahindra & Mahindra and Tata Steel. Among BSE Midcap constituents, Aditya Birla Fashion and Retail Limited shares gained 7.59%, Info Edge stocks followed close and Bharat Forge gained 6.73%. Music Broadcast, MTNL, and Reliance Power shares jumped over 19% each among BSE Smallcap index constituents.

Top drags: UltraTech Cement shares fell 2.36%, while HCL Tech dropped 1.71% and HUL slipped 1.62%. On the BSE Midcap index Oberoi Realty fell 5.3%, followed by JSW Energy and Supreme Industries. Sagar Cement, Mahindra EPC, and Chennai Petroleum were the top drags on the Smallcap index. 

Global watch: Among Asian peers, Shanghai Composite ended 1.04% lower on Friday while Hang Seng closed with gains. Nikkei 225 and Topix inched higher while KOSDAQ slipped. “All eyes are on US markets for updates on the stimulus package and upcoming presidential elections. The news on COVID-19 cases in Europe will also remain on the participants’ radar,” said Ajit Mishra, VP – Research, Religare Broking.

Technical take: “The Nifty was stuck in a 75 point range for the day on the back of below-average volumes. This is characteristic of a range bound market that is defined by indecisive movements. A clear direction will emerge only if we get past 12050 on the upside or break 11650 on the downside,” said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments. 

Outlook for next week: Analysts advise investors to maintain caution in the coming week. “On a weekly basis, the market has formed a “Narrow ranged inside body” formation. It is certainly going to invite major volatility in the coming week, which is coincidentally last week of the current month’s F&O contracts,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities. He adds that the ideal strategy for investors should be to trade long above the level of 12050 as it could push the market towards 12300-12400 levels.